Glaxo warns Advair rivals in US could erase profit growth

[BERLIN] GlaxoSmithKline Plc said profit growth this year is at risk of getting wiped out by rival drugmakers who want to start marketing cheaper copycat versions of its top-selling asthma medicine Advair in the US.

Profit will rise by 5 per cent to 7 per cent if generic competitors to the respiratory treatment don't enter the US market, the UK's biggest drugmaker said in a statement on Wednesday. If they do start selling their versions around mid-year, that could pare US sales of Advair to £1 billion (S$1.77 billion) and lead to a "flat to slight decline" in profit growth. Shares of Glaxo dropped by the most in three months.

Emma Walmsley, who takes over as chief executive at the end of next month, will inherit the challenge of accelerating revenue from promising new medicines in time to help offset the erosion of Advair's sales. The company has pledged that new products, including its blockbuster HIV medicines and vaccines for meningitis, will generate six billion pounds in annual sales next year.

Trying to predict the timing of the Advair generics is like "trying to pin a tail on a donkey with a blindfold on," Andrew Witty, the current CEO, said in a Bloomberg Television interview with Jonathan Ferro. The potential impact of the copycat medicines is also uncertain, the drugmaker said.

Mr Witty is scheduled to retire on March 31, making way for the first woman to take the helm of one of the world's largest drugmakers.

Revenue from Advair fell by 15 percent to £3.49 billion last year, assuming constant exchange rates, Glaxo said. Analysts had forecast that its revenue this year would drop to £2.73 billion globally, and plummet to £1.97 billion in 2018, according to the average of estimates compiled by Bloomberg. The US Food and Drug Administration is due to decide by the end of March on the first copy of Advair, from Mylan NV.

BLOOMBERG